Retirees sue over teachers' pension cutbacks

October 11, 2013

HELENA (AP) — Montana's largest union, and six retirees and current employees in the Teachers' Retirement System sued the state Friday over cost-saving cuts to their pension payments, a move retirees argue is unconstitutional.

The lawsuit involving the Montana Education Association - Montana Federation of Teachers has long been expected. Another is expected against the major pension plan that covers public employees.

The retirees warned lawmakers earlier this year that they would oppose any reduction in their guaranteed inflation increases of 1.5 percent, originally put in place by lawmakers in 1999. The lawsuit says that the inflationary adjustment took the average retirees annual benefit from $12,995 in 2000 to $15,537 this year.

The overhaul measure passed by lawmakers, and signed by the governor, reduces the inflationary increase to 0.5 percent starting in January.

The overhaul passed by lawmakers earlier this year asks both employers and employees to pay more, while reducing retiree benefits.

A recent report on the Teachers' Retirement System says the legislative changes balance that program in about 20 years. Without the changes, it won't balance for about 30 years.

Retirees argue the system can be fixed without cutting benefits for retirees who are counting on the money and expected they would be getting it as part of their employment deal.

"It didn't need to happen," said Eric Feaver, president of the teachers' union. "We told throughout the Legislature that this is an unnecessary step and it is unconstitutional."

The lawsuit filed with District Judge Mike Menahan of Helena, a former lawmaker, asks the court to declare the benefit-cut provision of House Bill 377 unconstitutional, and asks for a preliminary injunction to stop the reduction in cost-of-living payments.

"That annual benefit adjustment is part of their contract with the state and when the 2013 Legislature reduced that adjustment, it impaired that contract," the lawsuit says.